Understanding Chinese Tax and Finance Terms: A Comprehensive Guide for Language Learners

1. Introduction

As China’s global economic influence continues to grow, understanding its tax system and financial terminology becomes increasingly essential for businesses, investors, and individuals engaged in cross-border activities. For those learning Chinese, mastering these terms offers a unique advantage in the business world, opening doors to new opportunities and deeper cultural understanding.

This comprehensive guide aims to demystify Chinese tax and finance concepts, providing both linguistic and practical insights. We’ll explore a wide range of terms, from basic tax concepts to sophisticated financial instruments, giving you a solid foundation for navigating the complex world of Chinese finance.

For those serious about enhancing their Chinese language skills, particularly in the realm of business and finance, consider registering for classes at the LC Chinese School in Oslo. They offer flexible learning options to suit your schedule and goals, with specialized courses in business Chinese. Learn more and take the first step towards mastering Chinese financial terminology at https://lcchineseschool.com/flexible-classes/.

2. Basic Tax Terminology

2.1 税 (Shuì) – Tax

This character is fundamental to many tax-related terms in Chinese. Learning to recognize and pronounce it is crucial for understanding more complex concepts. In Chinese culture, the concept of taxation dates back to ancient times, with historical records showing tax systems in place as early as the Zhou Dynasty (1046-256 BCE).

2.2 增值税 (Zēngzhí shuì) – Value-Added Tax (VAT)

VAT is a key tax in China, applied to goods and services. The term combines 增值 (zēngzhí), meaning “value-added,” with 税 (shuì), “tax.” Introduced in 1994, VAT has become China’s primary indirect tax, replacing the previous business tax system for many industries.

2.3 营业税 (Yíngyè shuì) – Business Tax

While largely replaced by VAT, this term remains relevant in certain contexts. 营业 (yíngyè) means “business operations.” Until 2016, business tax was levied on the provision of services, transfer of intangible assets, and sale of real estate.

2.4 所得税 (Suǒdé shuì) – Income Tax

This term covers both individual and corporate income taxes. 所得 (suǒdé) translates to “income” or “earnings.” The current individual income tax system in China was established in 1980 and has undergone several reforms since then.

2.5 纳税人 (Nàshuì rén) – Taxpayer

纳 (nà) means “to pay” or “to hand in,” combined with 税 (shuì) and 人 (rén), meaning “person.” Understanding the concept of 纳税人 is crucial in Chinese business culture, where tax compliance is highly valued.

2.6 税率 (Shuìlǜ) – Tax Rate

率 (lǜ) means “rate” or “ratio,” making this term literally translate to “tax rate.” China employs various tax rates depending on the type of tax and the taxpayer’s circumstances.

2.7 应纳税所得额 (Yìng nàshuì suǒdé’é) – Taxable Income

This longer term combines several concepts: 应 (yìng) “should,” 纳税 (nàshuì) “pay tax,” 所得 (suǒdé) “income,” and 额 (é) “amount.” It’s a key concept in determining an individual’s or company’s tax liability.

2.8 税收优惠 (Shuìshōu yōuhuì) – Tax Incentive

优惠 (yōuhuì) means “preferential” or “favorable,” describing policies that offer tax benefits. China often uses tax incentives to encourage investment in certain regions or industries, making this term important for foreign investors.

3. Business-related Tax Terms

3.1 企业所得税 (Qǐyè suǒdé shuì) – Corporate Income Tax

企业 (qǐyè) means “enterprise” or “company,” combined with the term for income tax. The standard corporate income tax rate in China is 25%, but certain industries or regions may qualify for lower rates.

3.2 小规模纳税人 (Xiǎo guīmó nàshuì rén) – Small-scale Taxpayer

This term combines 小规模 (xiǎo guīmó) “small-scale” with the term for taxpayer. Small-scale taxpayers in China are subject to a simplified VAT calculation method and often enjoy preferential tax policies.

3.3 一般纳税人 (Yībān nàshuì rén) – General Taxpayer

一般 (yībān) means “general” or “ordinary,” distinguishing this from small-scale taxpayers. General taxpayers are typically larger businesses that are required to use the standard VAT calculation method.

3.4 税务登记 (Shuìwù dēngjì) – Tax Registration

税务 (shuìwù) means “tax affairs,” while 登记 (dēngjì) means “to register.” Tax registration is a crucial step for any business operating in China, requiring interaction with local tax authorities.

3.5 发票 (Fāpiào) – Invoice

This term is crucial in business transactions. 发 (fā) means “to issue,” and 票 (piào) can mean “ticket” or “bill.” In China, official invoices (or “fapiao”) are more than just receipts; they’re government-regulated documents essential for tax deduction purposes.

3.6 税收抵免 (Shuìshōu dǐmiǎn) – Tax Credit

抵免 (dǐmiǎn) means “to offset” or “to credit.” Tax credits in China can be used to reduce tax liability and are often part of policies to encourage certain behaviors or investments.

3.7 预提所得税 (Yútí suǒdé shuì) – Withholding Tax

预提 (yútí) means “to withhold in advance.” This tax is often applied to payments made to non-residents, such as dividends, royalties, or interest.

3.8 转让定价 (Zhuǎnràng dìngjià) – Transfer Pricing

转让 (zhuǎnràng) means “to transfer,” and 定价 (dìngjià) means “pricing.” Transfer pricing regulations in China aim to ensure that transactions between related entities are conducted at arm’s length.

Quiz Time!

Test your understanding of the terms we’ve covered so far:

1. What does 增值税 (Zēngzhí shuì) mean? a) Income Tax b) Value-Added Tax c) Business Tax
2. Which term represents “Taxpayer”? a) 纳税人 (Nàshuì rén) b) 税率 (Shuìlǜ) c) 发票 (Fāpiào)
3. What is the Chinese term for “Corporate Income Tax”? a) 个人所得税 (Gèrén suǒdé shuì) b) 企业所得税 (Qǐyè suǒdé shuì) c) 营业税 (Yíngyè shuì)
4. Which term means “Tax Incentive”? a) 税收优惠 (Shuìshōu yōuhuì) b) 应纳税所得额 (Yìng nàshuì suǒdé’é) c) 税务登记 (Shuìwù dēngjì)
5. What does 发票 (Fāpiào) mean? a) Tax Rate b) Invoice c) Tax Registration

(Answers: 1-b, 2-a, 3-b, 4-a, 5-b)

How did you do? If you found these terms challenging, don’t worry! Mastering Chinese financial terminology takes time and practice. The LC Chinese School in Oslo offers courses tailored to business Chinese, which can help you improve your understanding of these complex terms. Visit https://lcchineseschool.com/flexible-classes/ to explore their flexible class options.

4. Personal Income Tax Terms

4.1 个人所得税 (Gèrén suǒdé shuì) – Personal Income Tax

个人 (gèrén) means “individual,” distinguishing this from corporate income tax. China’s personal income tax system has undergone significant reforms in recent years, moving towards a more comprehensive income tax system.

4.2 工资薪金所得 (Gōngzī xīnjīn suǒdé) – Salary Income

工资 (gōngzī) and 薪金 (xīnjīn) both mean “salary,” with 所得 (suǒdé) meaning “income.” This category of income is subject to progressive tax rates in China.

4.3 劳务报酬所得 (Láowù bàochóu suǒdé) – Income from Independent Personal Services

劳务 (láowù) means “labor service,” and 报酬 (bàochóu) means “remuneration.” This category includes income from freelance work or consulting services.

4.4 经营所得 (Jīngyíng suǒdé) – Business Operation Income

经营 (jīngyíng) means “to operate” or “to manage,” referring to income from business operations. This applies to sole proprietors and individual business owners.

4.5 专项附加扣除 (Zhuānxiàng fùjiā kòuchú) – Special Additional Deductions

This term combines 专项 (zhuānxiàng) “special,” 附加 (fùjiā) “additional,” and 扣除 (kòuchú) “deduction.” These deductions were introduced in recent tax reforms and cover expenses such as education, healthcare, and housing mortgage interest.

5. Financial Accounting Terms

5.1 会计准则 (Kuàijì zhǔnzé) – Accounting Standards

会计 (kuàijì) means “accounting,” and 准则 (zhǔnzé) means “standards” or “guidelines.” China has its own set of accounting standards, known as Chinese Accounting Standards (CAS), which have been converging with International Financial Reporting Standards (IFRS) in recent years.

5.2 资产负债表 (Zīchǎn fùzhài biǎo) – Balance Sheet

This term combines 资产 (zīchǎn) “assets,” 负债 (fùzhài) “liabilities,” and 表 (biǎo) “sheet” or “table.” The balance sheet is one of the primary financial statements used in China, as in other countries.

5.3 利润表 (Lìrùn biǎo) – Income Statement

利润 (lìrùn) means “profit,” making this literally “profit sheet.” This financial statement shows a company’s revenues, expenses, and profits over a specific period.

5.4 现金流量表 (Xiànjīn liúliàng biǎo) – Cash Flow Statement

现金 (xiànjīn) means “cash,” and 流量 (liúliàng) means “flow.” This statement is crucial for understanding a company’s liquidity and cash management.

5.5 所有者权益 (Suǒyǒuzhě quányì) – Owner’s Equity

所有者 (suǒyǒuzhě) means “owner,” and 权益 (quányì) means “rights and interests.” This term represents the residual interest in the assets of an entity after deducting liabilities.

5.6 折旧 (Zhéjiù) – Depreciation

This term refers to the systematic allocation of the cost of a tangible asset over its useful life. Understanding depreciation is crucial for both accounting and tax purposes in China.

5.7 应收账款 (Yīngshōu zhàngkuǎn) – Accounts Receivable

应收 (yīngshōu) means “receivable,” and 账款 (zhàngkuǎn) means “accounts” or “money.” This term represents money owed to a company by its customers for goods or services delivered but not yet paid for.

5.8 应付账款 (Yīngfù zhàngkuǎn) – Accounts Payable

应付 (yīngfù) means “payable.” This term represents money a company owes to its suppliers or creditors for goods or services received but not yet paid for.

6. Banking and Finance Terms

6.1 人民币 (Rénmínbì) – Renminbi (RMB)

Literally “people’s currency,” this is the official name of Chinese currency. The primary unit of RMB is the yuan (元).

6.2 存款 (Cúnkuǎn) – Deposit

存 (cún) means “to store” or “to save,” and 款 (kuǎn) refers to “money” in this context. This term is used for bank deposits and is a key concept in Chinese banking.

6.3 贷款 (Dàikuǎn) – Loan

贷 (dài) means “to lend” or “to borrow.” Understanding loan terms and conditions is crucial for businesses operating in China.

6.4 利率 (Lìlǜ) – Interest Rate

利 (lì) means “interest” or “profit,” combined with 率 (lǜ) “rate.” China’s interest rates are set by the People’s Bank of China and play a crucial role in monetary policy.

6.5 抵押 (Dǐyā) – Mortgage

This term implies using property as collateral for a loan. Mortgages are becoming increasingly common in China as the real estate market develops.

6.6 信用卡 (Xìnyòngkǎ) – Credit Card

信用 (xìnyòng) means “credit,” and 卡 (kǎ) means “card.” Credit card usage has been growing rapidly in China in recent years.

6.7 外汇 (Wàihuì) – Foreign Exchange

外 (wài) means “foreign,” and 汇 (huì) relates to “exchange” or “remittance.” Understanding foreign exchange regulations is crucial for international businesses operating in China.

6.8 银行间同业拆借市场 (Yínhángjiān tóngyè chāijiè shìchǎng) – Interbank Market

This term refers to the financial market where banks lend and borrow funds from each other. It plays a crucial role in China’s monetary system.

7. Investment-related Terms

7.1 股票 (Gǔpiào) – Stock

股 (gǔ) refers to “share” or “stock,” and 票 (piào) means “ticket” or “certificate.” The Chinese stock market, while relatively young, has become one of the largest in the world.

7.2 债券 (Zhàiquàn) – Bond

债 (zhài) means “debt,” and 券 (quàn) means “certificate” or “bond.” China’s bond market has been growing rapidly and is now the second-largest in the world.

7.3 共同基金 (Gòngtóng jījīn) – Mutual Fund

共同 (gòngtóng) means “mutual” or “common,” and 基金 (jījīn) means “fund.” Mutual funds have become increasingly popular investment vehicles in China.

7.4 公募基金 (Gōngmù jījīn) – Public Fund

公募 (gōngmù) means “public offering.” These are mutual funds that are publicly offered and available to retail investors.

7.5 私募基金 (Sīmù jījīn) – Private Fund

私募 (sīmù) means “private placement.” These funds are not publicly traded and are typically only available to qualified investors.